Arkansas committee advances bill letting utilities collect construction costs before plants begin operating

Representative Les Eaves, sponsor of Senate Bill 307, told the House Insurance & Commerce Committee that Arkansas must replace retiring capacity and build new generation to remain competitive for large industries and data centers. "We are in a situation now where we are about to lose a significant amount of power ... we're gonna lose about 3.2 gigawatts of power," Eaves said, arguing the bill lets utilities recover construction costs in a way that he said is cheaper for ratepayers over time.

Nut graf: The bill would authorize a construction work-in-progress (CWIP) cost-recovery mechanism and an annual rider that lets regulated utilities begin recovering certain construction costs from customers while a project is under construction. Proponents said quicker recovery reduces long-term rate pressure and helps attract major employers; critics said it shifts financial risk to ratepayers, trims time for Public Service Commission (PSC) review and could lock in costlier resources if procurement is not competitive.

How the bill would work: Under SB 307, a utility seeking to build a "strategic investment" would apply to the Arkansas Public Service Commission for upfront approval of the project and an initial rider rate. The PSC would have a set period to approve or deny the application; if approved, the utility could start collecting a rider to recover specified construction costs during the build. The PSC would then conduct annual reviews and a post‑project prudency review with potential refunds to customers if the commission finds imprudence.

PSC staff described the current practice and the change the bill would create. Danny Hofer, chief of staff at the Arkansas Public Service Commission, explained that "currently, no. Currently, it's not until the plant goes into service" that utilities ask to recover costs; under SB 307, recovery would begin during construction and be reviewed annually.

Supporters' case: Economic-development witnesses and business groups urged the committee to approve the measure to ensure Arkansas can serve large customers that require gigawatts of power. Allison Thompson of the Economic Development Alliance for Jefferson County said the measure could facilitate redevelopment at the White Bluff site and help attract projects that ask "is it reliable? Is it redundant? Is there enough of it, and is it available?" Brad Lacy of the Conway Area Chamber said site selectors now often ask first about available electric capacity, and Jack Thomas of the Little Rock Regional Chamber said lack of power is costing the state potential investments.

Opponents' concerns: Consumer advocates, renewable developers and large industrial customers urged changes or a delay. Osiris Bali with the Arkansas Public Policy Panel called SB 307 "not only a bad bill, but it's bad policy," saying it "hits the hardest and most vulnerable people, low income households, seniors, the elderly, and the rural communities." Kelly McQueen, representing large industrial electric users, said the measure as written would be a "wholesale reregulation of utilities in Arkansas" and warned it could become a tool to increase returns to utility shareholders without adequate guardrails.

Technical and resource questions: Renewable developers asked that wind, solar and storage be treated equitably. Simon Mahan of the Southern Renewable Energy Association said the draft excludes Arkansas-based wind from eligibility and imposes higher scrutiny on solar, and urged changes so renewables and hybrid storage can compete. Witnesses also cited experience in other states: examples discussed included delayed or over-budget projects under CWIP-like regimes in other jurisdictions.

Oversight, timelines and protections: Opponents and some lawmakers pressed for stronger guardrails. Speakers flagged short PSC review windows in the bill (committee discussion referenced 90-day and 60-day review periods in different sections), limits on public participation for large approvals, and reduced cooperative oversight. Proponents said the bill requires PSC review, includes a provision to keep rates no more than 10% above the national average and calls for annual reporting and look‑back prudency reviews, with refunds or bill credits if the PSC finds imprudent costs.

Quantities and timing cited in debate: Sponsors said replacing the two retiring plants will take roughly 3–5 years; Eaves and others cited about 3.2 gigawatts lost and several gigawatts of new requests in the state. Eaves suggested the average residential customer's bill might rise about $5 per month under the proposal, while opponents warned that larger percentage increases remain possible depending on project mix and baseline comparisons to a national average.

Committee action and next steps: After several hours of testimony and questions from committee members and numerous witnesses both for and against the bill, Representative Les Eaves made a motion to pass SB 307. The committee approved the motion by voice vote; no roll-call tally was recorded in the transcript. The committee directed that the bill move forward for further legislative consideration.

Ending note: Debate centered on a tradeoff lawmakers framed as timing and scale — whether to enable pay‑as‑you‑go recovery during construction to smooth long-term rates and attract investment, or to preserve the existing post‑construction prudency review timeline to avoid placing early project risk on ratepayers. Supporters said annual PSC reviews and refund mechanisms provide protection; opponents asked for more specific guardrails, competitive procurement and clearer consumer protections before broad adoption.